SM Prime to raise P20B from retail bond issue

Property giant SM Prime Holdings is raising as much as P20 billion from a fresh offering of seven-year retail bonds this May, boosting funds for the group’s expansion program.

The retail bonds due 2024— SM Prime’s fourth offering of peso-denominated bonds to the public—were priced at 5.1682 percent a year.

The retail bonds will be offered by SM Prime to investors through underwriters from May 4 to May 11, following the receipt of the permit to sell from the Securities and Exchange Commission.

“The proceeds of the retail bonds will enable SM Prime to pursue our expansions of mall and residential businesses, which are the growth drivers of the company,” SM Prime president Jeffrey Lim said in a statement on Wednesday.

The base offer is P15 billion but SM Prime has the option to raise the offer by another P5 billion. The retail bonds are set to be issued on May 18.

Similar to its previous bond issues, this new offering of “Series G” bonds were rated “PRS Aaa” by Philippine Rating Services Corp. (PhilRatings), the highest rating assigned by the local credit watcher.

The rating suggests that the bonds carry the smallest degree of investment risk and that the issuer, SM Prime, has a strong capability to meet its financial commitment.

The joint issue managers for this offering are BDO Capital & Investment Corp. and China Bank Capital Corp., which are also acting as joint lead underwriters and joint bookrunners together with BPI Capital Corp., PNB Capital, First Metro Investment Corp. and SB Capital Investment Corp.

SM Prime said it remained “committed to its role as a catalyst for economic growth, delivering innovative and sustainable lifestyle cities, thereby enriching the quality of life of millions of people.”

The property firm is diversifying into upscale residential property and subdivision development this year alongside plans to put up new shopping malls in line with a P50-billion annual expansion program.

This year, SM Prime is set to open five new shopping malls in the Philippines which will bring its mall portfolio in the country to 65. These are: SM CDO Downtown Premier in Cagayan de Oro, SM Cherry Antipolo in Rizal, SM Center Tuguegarao Downtown in Cagayan, SM City Puerto Princesa in Palawan and SM Center Lemery in Batangas. By the end of 2017, its 65 malls in the Philippines and seven malls in China will have a combined gross floor area of 9.2 million square meters.

In the residential segment, SM Prime’s property arm SM Development Corp. is set to launch 15,000 to 18,000 residential units in high-rise, mid-rise as well as house and lot developments. This is more aggressive than the 15,000 residential launches seen last year. Sales take-up last year stood at 12,700 units.

SMDC is upbeat on the residential segment this year, with sales take-up in the first quarter rising by 54 percent year-on-year to P12.9 billion.

In mainland China, SM Prime will also continue its expansion. It has started construction of its first residential project in Chengdu, near its existing SM shopping mall.

SM Prime allocates 80 percent of its capital expenditure on project developments, mostly for mall and residential development. The remainder is used for landbanking.